Petrol prices 'may hit £2 at pumps'

International development minister Alan Duncan suggested the price of crude could top 200 dollars a barrel

The battle for control of Libya is still raging amid growing fears over the impact of instability in the region on oil prices, which could see petrol prices hit as much as £2 a litre at the pumps.

Fierce fighting was under way in the city of Zawiya, just 50 miles from the capital Tripoli, as rebels struggled to repel an assault by Colonel Muammar Gaddafi's forces.

Meanwhile, insurgents were reported to have taken control of the oil port of Ras Lanuf after a series of bloody engagements, a key strategic site.

With the fate of the country hanging in the balance and a full-blown civil war on the cards, a British minister has warned over the impact on fuel costs.

Brent Crude has already risen to 116 dollars in response to months of unrest across the Gulf and North Africa.

But international development minister Alan Duncan, a former oil trader, suggested the price could yet top 200 dollars a barrel - significantly above the current record of 147 dollars from July 2008.

In a worst-case scenario where terrorists exploit the turmoil in the Gulf to bomb tankers and reserves, the price could even nudge 250 dollars, which would leave UK motorists paying some £2.03 at the pumps.

"I've been saying in government for two months that if this does go wrong, £1.30 at the pump could look like a luxury," Mr Duncan said. "200 dollars is on the cards if... anyone is reckless and foments unrest."

He added: "It could be very serious. If crude oil doubles, you're going to have a serious spike (in petrol prices). Try living without it for a week."